‘Contractual disagreements’ on £720M PFI deal spark rethink
The consultant who drew up a 25-year private finance contract (PFI) between the Isle of Wight Council and Island Roads Services has been called back in to settle a dispute between the council and the contractor.
Jasmine Consulting has won a £179,400 contract to cut costs and resolve “contractural disagreements” on the £720M PFI highways scheme that it originally drew up six years ago.
The 25-year PFI project between the Isle of Wight Council and contractor Island Roads Services began in April 2013 and covers upgrades and maintenance of 803km of rural and urban roads, 767km of footways, 12,068 street lights, 209 bridges and structures, cycleways, public car parks, signage, CCTV and street furniture.
The council and contractor refused to reveal the nature of the disagreements when contracted by New Civil Engineer.
According to the Official Journal of the European Union (OJEU), Southampton-based Jasmine Consulting has been brought in to resolve “contractual disagreements” between both parties and to reduce the cost of the contract by £2M per year.
The contract award notice, posted by Isle of Wight Council, states: “Due to ongoing budgetary pressures the authority needs to make financial savings from the PFI contract of £2M per annum. It has identified several possible options for reducing the cost of the contract through a current consultant support arrangement.
“These savings and others are required to be implemented without impacting on the integrity of the contract. Several PFI contractual disagreements have arisen that need to be resolved alongside delivery of cost reductions.
“The authority requires the service provider to enable successful resolution of the contractual disagreements and the continuation of work to agree a deliverable cost reduction programme.”
Funding for the PFI contract has predominantly come through a £430M non-repayable grant from the Department for Transport.
The use of PFI and PF2 contracts on future projects was scrapped by chancellor Philip Hammond in his Autumn Budget.
It followed several high-profile disputes including the troubled Aberdeen Western Bypass PFI scheme as well as Amey’s dispute with Birmingham Council over a £2.7bn PFI highways contract in Birmingham.